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State of U.P. Vs. Sri Padam Singh Rana - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtAllahabad High Court
Decided On
Case NumberCivil Revn. No. 1652 of 1967
Judge
Reported inAIR1971All270
ActsArbitration Act, 1940 - Sections 2
AppellantState of U.P.
RespondentSri Padam Singh Rana
Advocates:K.N. Singh, Adv.
DispositionRevision dismissed
Excerpt:
.....of arbitration act, 1940 - purpose of arbitration - resolve dispute between the parties to the agreement - decision of arbitrator - binding on both parties. - - 'except where otherwise specified in the contract, the decision of the superintending engineer for the time being shall be final, conclusive and binding on all parties to the contract, upon all questions relating to the meaning of the specifications, designs, drawings and instructions hereinbefore mentioned and as to the quality of workmanship or materials used on the work or as to any other question, claim, right, matter or thing whatsoever in any way arising out of or relating to the contract, designs, drawings, specifications, estimates, instructions, orders, or these conditions, or otherwise concerning the works, or the..........as already pointed out, the first part of clause 23 makes the decision of the superintending engineer binding on all parties. but the second part of clause 23 makes its decision binding only on the contractor. this decision in respect of a dispute falling under the second part of the clause 23 will not be binding on the other parties to the dispute.8. now, the essential characteristic of arbitration is the binding character of the decision of the arbitrator on the parties before him. the very purpose of an arbi-tration is to resolve disputes between the parties to the agreement. where the decision of a person is binding on only one of the parties and not on all the parties to the dispute, it cannot be said that the function, which the person giving the decision is exercising, is.....
Judgment:
ORDER

1. Padam Singh Rana, the opposite party, entered into an agreement with the State , for executing a work. According to him, he has completed the work and is entitled to payment in accordance with the agreement; the other party maintains that he has not completed the work in accordance with the terms of the agreement.

2. The Superintending Engineer, 1st Circle, P. W. D., Meerut, gave an award on this dispute. He filed the award in the court of the District Judge, Dehradun. There Padam Singh Rana objected to the award being made rule of the Court. He said that in the agreement between the parties there was no provision for referring any matter to an arbitrator for decision and that accordingly, the provisions of the Arbitration Act were inapplicable. The applicant, on the other hand, contended that there is a provision in the agreement for arbitration and that, accordingly, the award is validly given. The applicant relied on Clause 23 of the agreement.

3. After hearing both parties, the Civil fudge upheld the argument of Padam Singh 'Raua. He held that neither Clause 23 nor any other clause of the agreement provided for arbitration and that accordingly the award could not be made rule of the Court.

4. Feeling aggrieved with his decision, the State has filed this revision. In the first instance it was listed before a learned Single Judge. The learned Judge has referrsd toe case to a larger Bench. Hence the case comes to us.

5. Chief Standing Counsel has re-ferred us to Clause 23 of the agreement in support of the State's case that there is an agreement for arbitration. Clause 23 reads: ''Except where otherwise specified in the contract, the decision of the Superintending Engineer for the time being shall be final, conclusive and binding on all parties to the contract, upon all questions relating to the meaning of the specifications, designs, drawings and instructions hereinbefore mentioned and as to the quality of workmanship or materials used on the work or as to any other question, claim, right, matter or thing whatsoever in any way arising out of or relating to the contract, designs, drawings, specifications, estimates, instructions, orders, or these conditions, or otherwise concerning the works, or the execution or failure to execute the same whether arising during the progress of the work, or after the completion thereof or abandonment of the contract by the contractor, shall be final, conclusive and binding on the contractor.' No other clause of the agreement has been relied on.

6. It may be noticed that Clause 23 consists of two parts. By the first part it is provided that the decision of the Superintending Engineer shall be final, conclusive and binding on all parties to the contract upon all questions relating to the meaning of the specifications, designs, drawings and instructions hereinbefore mentioned. By the second part it is provided that the decision of the Superintending Engineer, as to the quality of workmanship or materials used on the work or as to any other question, claim, right, matter or thing whatsoever in any way arising or relating to the contract, designs, drawings, specifications, estimates, instructions, orders, or these conditions, or otherwise concerning the works, or the execution or failure to execute the same whe-their arising during the progress of the work, or after the completion thereof or abandonment of the contract by the contractor, shall be final, conclusive and binding on the contractor. It may also be noticed that there is one significant difference between the two parts of Clause 23, while the first part of Clause 23 provides that the decision of the Superintending Engineer shall be final, conclusive and binding 'on all parties to the contract', the second part provides that his decision shall be final, conclusive and binding 'on the contractor'. The third noticeable difference between the two clauses is in regard to the scope of the enquiry before the Superintending Engineer. By the first part of Clause 23, the Superintending Engineer is empowered to decide disputes between the parties relating to the meaning of the specifications, designs, drawings and instructions mentioned in the earlier clauses of the agreement. So the scope of enquiry is limited to the interpretation of the terms of the agreement relating to specifications, designs, drawings and instructions. The second part of Clause 23 is very comprehensive. It empowers the Superintending Engineer to decide any question, claim, right, matter whatsoever in any way arising out of or relating to the contract.

7. The dispute, which was the subject-matter of the impugned award, would not fall under the first part of Clause 23. It falls under the second part of Clause 23. So we have to decide whether the second part of Clause 23 provides for resolution of disputes by arbitration. And on this point the difference between the two parts of Clause 23 becomes very material. As already pointed out, the first part of Clause 23 makes the decision of the Superintending Engineer binding on all parties. But the second part of Clause 23 makes its decision binding only on the contractor. This decision in respect of a dispute falling under the second part of the Clause 23 will not be binding on the other parties to the dispute.

8. Now, the essential characteristic of arbitration is the binding character of the decision of the arbitrator on the parties before him. The very purpose of an arbi-tration is to resolve disputes between the parties to the agreement. Where the decision of a person is binding on only one of the parties and not on all the parties to the dispute, it cannot be said that the function, which the person giving the decision is exercising, is arbitral in character.

9. As the essential characteristic is absent in the second part of Clause 23, we are unable to hold that it provides for arbitration in accordance with the provisions of the Arbitration Act. Accordingly, the provi-sions of the Arbitration Act would be inapplicable in this case and the award cannot be made rule of the Court.

10. Chief Standing Counsel also submitted that Padam Singh Rana had requested in writing the Superintending Engineer to decide the dispute in accordance with Clause 23. Thereafter he appeared before the Superintending Engineer. After hearing both parties the Superintending Engineer gave his award. So he cannot now go back and the award is binding on him. It is not necessary for us to express any opinion on this point. The only question before us is whether the so-called award given by the Superintending Engineer is an award under the provisions of the Arbitration Act and whether it can be made rule of the Court. On that point we have little doubt in our mind that it is not an award under the provisions of the Arbitration Act and that accordingly it cannot be made rule of the Court. Whether the decision of the Superintending Engineer is otherwise binding or not on Padam Singh Rana and whether any legal remedies will be open to him to seek relief are not the questions falling within the scope of the revision and so we express no opinion on them.

The revision is dismissed with costs.


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